Sales Negotiation between AIG-Hyundai Investment Trust Security Co. Broken off

The sales negotiation between the Korean government and the consortium of American International Group, Inc. (AIG) for the transaction of the 3 Hyundai affiliated financial companies including Hyundai Investment Trust and Securities Co. Ltd., Hyundai Securities, Co. Ltd., and Hyundai Investment Management, Co. Ltd., has finally broken off after 2 year`s negotiation in vain.

However, since two other U.S. financial groups expressed their intention to purchase, the sales negotiation will go on. Lee Keun-Young, the chairperson of the Financial Supervisory Commission held a press conference and revealed that "by the rejection of the AIG to the final proposal of the Korean government, the sales negotiation was actually broken off."

AIG side also announced that "we have extended the negotiation period by the request of the Korean government even though the time set by the MOU with the Financial Supervisory Commission on August 22nd was over by the end of last year. We will stop the negotiation due to the failure of reaching an agreement despite of the efforts from both sides."

Chairperson Lee remarked that "the Wilber Roth Group expressed its intention to form another consortium to continue the purchase negotiation and another U.S. financial company submitted the letter of intention (LOI) and one more financial company expressed its intention for purchase. The Committee will resume the sales negotiation with those groups."

Mr. Lee said, "I cannot reveal the name of the company that submitted LOI but it is one of the world famous financial companies." And he added that there is no fixed negotiation procedure made by now.

For the reasons of the negotiation breakdown, Mr. Lee explained, "with regard to the loss reserve for the debt of Hyundai Investment Trust and Securities, Co. Ltd., AIG demanded for the total compensation of the Korean government, which is not acceptable."

However, the Wilber Roth group released an announcement yesterday that "we are convinced that the future of the Korean financial market is bright and the three affiliates of the Hyundai group has tremendous growth potential after the restructuring. We are looking for a new consortium partner."

Byong-Ki Lee eye@donga.com